1. Field of the Invention
This invention relates to a computerized medical payment system and more particularly, to a system for correlating utilization review (UR) agreements with actual requests for payment of medical bills.
2. Background
The escalating cost of medical care, especially in the area of workers compensation, has led many insurance companies to adopt a strategy known as managed care. A primary component of managed care is a set of rules that specify, for a given injury, the type of treatments, and the quantity of such treatments which are allowed. These rules come from several different sources, namely state regulations, preferred provider organization (PPO) agreements between the providers and payors, and private rules written by the insurance companies. Most of the fifty states have formulated rules covering the type and quantity of medical treatments which are allowable and under what conditions they are allowable based on a given injury. Some state rules are very specific and leave little room for adjustment. Other states' rules are rather loose and function more in the nature of guidelines. PPO agreements are blanket agreements between payors, providers and patients that, like the state rules, list the types and quantity of medical treatments that will be authorized for a given diagnosis. Most PPO agreements also specify the maximum allowable fees for various medical services.
The rules which govern the authorization of managed care treatment are generally applied according to a rule hierarchy, with state rules preempting all others. Many payors create a specific set of rules that govern the authorization of treatments; these rules are generally obtained from statistically and clinically derived norms based on historical treatment patterns for similar injuries. In those situations where the payor has no specific rules, the UR vendor uses a set of generic rules which are generally based on industry wide norms. In all cases, the application of rules proceeds from top to bottom. First the state rule is applied, then the PPO rules, then the payor's specific or generic rules.
In addition to the rules discussed above, a process known as utilization review (UR) has become an important part of managed care, especially in states with less specific rules. UR is the process whereby a pre-treatment agreement, which outlines the nature and quantity of the authorized medical treatments, is negotiated between the provider and the payor. Then the medical bills from the provider are reviewed, either by the payor or a UR vendor hired by the payor, to ensure that the agreements have been honored. Under a typical UR scenario, the provider diagnoses the injury, determines what treatment is needed, and then calls the payor for authorization. The payor's agent, typically a nurse, uses the provider's diagnosis, and based on the type of injury and other factors, such as the patients age and prior medical history; determines what treatments are to be authorized.
If the provider, in his or her professional judgment, is satisfied with treatment plan agreed to by the payor, then an agreement, (known as a "UR agreement") is formed which sets forth the agreed-upon payment terms for the treatment of the patient. If the provider is not satisfied, then further negotiations are required. In most states, a nurse cannot override the professional judgment of a physician. Thus, if the provider is not satisfied with the treatment plan offered by the payor, then, typically, a physician employed by the payor steps in to negotiate the UR agreement. Once the UR agreement is reaccuse, the payor calculates a cost savings based on the difference between the requested treatment and what was actually authorized. Ideally, the provider then treats the patient according to the agreed upon services and sends the bills to the payor for payment.
For example, a provider might request a hospital stay of five days for a particular patient. The payor, after evaluating the injury, and based on the provider's diagnosis, might conclude that a stay of only three days is sufficient. The payor offers three days, and after due consideration, the provider concurs, and an agreement is reached. Once this agreement has been reached with the provider, the payor enters into its books a cost savings equivalent to the difference in cost between the requested treatment and the recommended treatment, which in this example would be the cost of two days of hospitalization.
A significant problem in the art of UR has been the inability for payors to effectively correlate the UR agreements with the bills actually received and paid. Thus, in the example above, if the patient stayed in the hospital for five days, instead of the authorized three, the payor might be billed for, and might pay for, five days. This inability to effectively correlate the agreements to the bills has arisen in part from the sheer volume and complexity of the UR agreements and medical bills being processed. The payors have been unable to use computers to automate this task because there has existed no method to code the UR agreement and the medical bill into forms that can be used by the computer, and no method to compare UR agreements to the medical bills. This inability to enforce the UR agreements has resulted in frequent overpayments, and rendering the cost savings attributed to the UR agreements generally illusory.
From the above discussion, it becomes clear that a complete medical bill processing system must check the entire bill against the applicable rules and locate any and all UR agreements which affect the amount to be paid. This task is daunting because each medical bill is a multi-line, itemized listing of complex medical services provided to the patient by one or more providers. Each line comprises a description of the service rendered and the charge for that service. Each line also comprises a procedure code which is a numeric code that indicates which services was provided.
Methods of enforcing the state administrative rules are known in the prior art. For example, U.S. Pat. No. 4,987,538 to Johnson, teaches a method for automated processing of the state rules that govern provider billings. In the method of Johnson, the rules are converted into procedure codes and stored. As bills are received by the payor they are converted to procedure codes and compared to the coded state rules. When a state rule is found to cover the treatment specified in a particular billing, then that rule is applied to the bill. Johnson also teaches the method of checking multiple billings for potential duplication. Unfortunately, the method of Johnson is inapplicable to the task of correlating UR agreements to the provider billings because of the additional complexities that arise in coding the UR agreements. The present invention discloses a method for performing the much more difficult task of correlating UR agreements to medical b,ills.
The difficulty in coding the UR agreements arises because of the complex nature of medical services, the time delay between the authorization of treatment and the receipt of bills for that treatment, the complex nature of medical bills, and finally, the fact that UR agreements are negotiated on a case by case basis. Unlike UR agreements, the various rule systems, whether state rules, PPO rules, or provider rules, are independent of any particular patient or provider. When a particular rule applies to a particular treatment, the rule is always applied. Thus the task of correlating procedure codes in a medical bill is relatively simple. The bill processing system can look for an exact match between the procedure code in the medical bill and the procedure code in the rule database. If a match is found, then the rule is applied. If the provider entered the wrong code on the bill, and thus triggered the wrong rule, the error lies with the provider and it is solely the provider's responsibility.
By contrast, UR agreements are contracts which are negotiated between the provider and the payor. The payor enters a procedure code in the coded UR agreement, and the provider enters a procedure code in the bill. Both are responsible for entering the right code, and thus both are responsible for errors and misunderstandings. Unfortunately, the complex nature of medical services means that the coding is imperfect, and therefore the code used in the UR agreement may not match the codes used in the itemized bill. Thus a bill review processing system which simply looks for exact matches between procedure codes would often miss the correlation between a UR agreement and items in a bill. The present invention solves this problem by recognizing imperfect matches and then looking for the best match from a set of imperfect matches.
Two other factors complicate the coding and subsequent correlation of UR agreements to medical bills. The rule processing system discussed above does not suffer from these added complexities. First, there is no simple relationship between, a UR agreement and a medical bill. A single medical bill may relate to many UR agreements and a single UR agreement may relate to many medical bills. The second difficult arises from the fact that UR agreements, as stored in a database, are transitory. Thus errors in the database, such as an improper procedure code, are far more difficult to detect and correct than errors in the relatively static rule database. Here again, the process of looking for the best match from a list of imperfect matches greatly mitigates these problems and simultaneously increases the number of matches found while minimizing the number of erroneous matches.